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Archive for the ‘disaster’ Category

Tax Day is May 15 For Parts of Calif.

Posted by taxguru on January 11, 2023

Because of April 15 falling on a Saturday this year, along with DC’s special Emancipation Day holiday on April 17, the official IRS Tax Day for filing most kinds of 2022 income tax returns (or extensions) is Tuesday, April 18, 2023.

As happened last year here in Florida, with Hurricane Ian, when a Federally Declared disaster hits a large part of the country, IRS has the power to provide extra time for those taxpayers and preparers who were in those affected areas.

Less than two weeks into the new year and IRS has already given such an extension to many parts of California.

IRS News Release:
California storm victims qualify for tax relief; April 18 deadline, other dates extended to May 15

Unlike the Hurricane Ian deadline extension, which encompassed the entire state of Florida, this new one currently only covers the following named counties:

Colusa, El Dorado, Glenn, Humboldt, Los Angeles, Marin, Mariposa, Mendocino, Merced, Monterey, Napa, Orange, Placer, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, Stanislaus, Sutter, Tehama, Ventura, Yolo and Yuba

As the press release says, this list may need to be expanded as things develop out there on the Left Coast.

We have several Calif clients who do benefit from this one month delay under the current list, but clients in our old stomping grounds of Alameda and Contra Costa counties weren’t hit hard enough by the storms to qualify at this time.

[Update 1/11/23] – IRS has added the following Calif. counties to the list of those qualifying for the May 15 filing deadline:
Alameda, Contra Costa, Fresno, Kings, Lake, Madera, Mono, San Benito, San Francisco, and Tulare counties.

[Update 1/13/23] – As was expected, the Calif Franchise Tax board has gone along with this filing extension for storm affected counties, including the ones recently added by IRS.
The FTB news release: Tax Relief for Californians Impacted by Storms

Posted in disaster, IRS, TaxDay | Comments Off on Tax Day is May 15 For Parts of Calif.

IRS Disaster Related Extended Filing Dates

Posted by taxguru on September 29, 2022

As we were waiting for Hurricane Ian to reach us, I was thinking that if it turned out to be as destructive as predicted, IRS would have to extend the upcoming October 17 deadline for taxpayers and preparers who are located here in Florida, as they recently did for storm and flood victims in Alaska and Hurricane Fiona victims in Puerto Rico. Those extensions were until February 15 of 2023.

Fortunately, IRS acted quickly and has issued the same extension of the October 17 deadline for all taxpayers and preparers in Florida since the entire state is part of the federally designated disaster area. That extra time will help ease the stress of having to get a lot of tax returns wrapped up by October 17.

Besides the longer time allowed to prepare and file 2021 tax returns, the status of being a federally designated disaster allows for a very unique tax saving opportunity. Any losses suffered from these recent disasters may be deducted on 2021 tax returns, even though the disaster took place in 2022. It is an excellent way to get tax money back into the hands of the victims much sooner than making them wait another year.

I have prepared several of these kinds of tax returns, where we claimed the losses in the year before the disaster. Most of these were for losses due to earthquakes and wildfires in California. The trickiest aspect to claiming such a deduction is calculating the amounts of the losses so soon after the event happened. We need to factor in how much is expected to be received from any insurance coverage that may apply and come up with the net loss incurred.

A tip for anyone claiming these kinds of losses on their tax returns: I have been able to avoid any IRS challenges to these disaster loss deductions by attaching before and after photographs of the damaged or destroyed properties.

Update 10-5-2022: IRS has extended this same official filing delay (until 2/15/2023) to those who were in the Hurricane Ian targets in North & South Carolina.

Posted in disaster, Due Dates, IRS | Comments Off on IRS Disaster Related Extended Filing Dates

Tax Day For Texas is June 15

Posted by taxguru on February 22, 2021

Due to the massive Winter freeze and resulting loss of power, the entire State of Texas has been granted more time by IRS to file their 2020 income tax returns. 

Victims of Texas winter storms get deadline extensions and other tax relief

As explained in this news release from IRS, everyone in Texas, plus those outside that state who were affected by the storm, will have until June 15, 2021 to file their business (normally due March 15) and individual (normally due April 15) income tax returns.  

While there have been rumors of another nationwide extension of Tax Day based on the Covid-19 shut-downs, nothing concrete has been set regarding that. 

Posted in disaster, TaxDay | Comments Off on Tax Day For Texas is June 15

Filing Extension for Calif WildFire Victims

Posted by taxguru on October 13, 2017

This has been a terrible past few months for huge disasters.

As I expected, IRS has just announced that they are giving the victims of the current California wildfires the same extended due date as they earlier provided for hurricane victims, January 31, 2018 for their 2016 tax returns, which would otherwise have been due in by this coming Monday, October 16.

IRS Gives Tax Relief to Victims of California Wildfires; Extension Filers Have Until Jan. 31 to File

As this announcement explains, this special extension applies to individuals and businesses located in the fire area, as well as those who reside outside the fire zone, who have been helping to fight the inferno and assist in the relief efforts.

As with any disaster of this magnitude, the Tax Code allows the unreimbursed loss to be deducted on either the current year’s (2017) tax returns or on the previous year’s (2016).  I explained more about how this process works in my post on Hurricane Harvey tax breaks. 


Update 10/13/2017: As is their normal practice, the California FTB has announced their agreement to honor the IRS’s extended 2016 filing deadlines (until 1/31/18)  for those who have been affected by the current wildfires, as well as the recent hurricanes.

California Taxpayers Impacted by Wildfires Receive More Time to File, Pay

Posted in disaster, extensions | Comments Off on Filing Extension for Calif WildFire Victims

IRS Hurricane Delays

Posted by taxguru on September 28, 2017

IRS has released the following summary of the delayed filing dates for taxpayers and preparers who are/were located in the areas hit by Hurricanes Harvey, Irma and Maria.

IRS Offers Help to Hurricane Victims: A Recap of Key Tax Relief Provisions Available Following Harvey, Irma and Maria

Hopefully, Maria will be the last big storm of the year to require such measures.

Posted in disaster, IRS | Comments Off on IRS Hurricane Delays

IRS Extends Deadlines for Irma Victims

Posted by taxguru on September 12, 2017

All last week, as we all prepared for the oncoming wrath of Hurricane Irma, I was confident that everyone in Florida could expect the same kind of official extensions of time from IRS to file tax returns that had their first extension expiring in the next few months. 

While this was mainly 2016 1040s, even more pressing are the extensions for pass-through entities, such as LLCs, Partnerships, Trusts and S-Corps, which have extended deadlines of September 15, 2017 for their 2016 tax returns.  In the “old days” filing any of these tax returns late wasn’t a big deal because late penalties were only based on the amount of taxes due, and as pass-through entities, they had no taxes and thus no late penalties.  However this was changed a number of years ago and nowadays IRS is very aggressive in assessing late filing penalties of hundreds of dollars per month per K-1.  These frequently grow into thousands of dollars.

Since Sept 15 is fast approaching, for the past few days, I have been checking the IRS news page for an announcement similar to the one they had for Hurricane Harvey, giving all those affected by Irma more time to file their 2016 tax returns.  Until just a short while ago, the only Irma affected territory mentioned as having filing relief were parts of the U.S. Virgin Islands.

IRS has just released this news release, announcing the expansion of the list of areas that have been granted official deadline extensions due to Hurricane Irma disruptions.

As of right now (2:50 pm on 9/12/17) The IRS’s list of affected Florida areas only includes 16 counties.  Since the evacuation order, preparation and the actual storm included all 67 counties here in Florida, IRS will need to expand that list.  According to the IRS description, it’s a function of what they are told by FEMA.  While not all 67 counties were hit as hard as some others, most were affected by the storm.  Even people who didn’t have any actual storm damage, but heeded the Governor’s pleas to get the hell out of Florida, are going to need a lot of time to get back to their normal lives after returning to their homes.  

I can only assume that the IRS’s official list of affected Florida counties will grow over the next few days or weeks.  Rather than list 60 to 65 county names, they may just take the simpler route and include the entire State of Florida.

[Update 9/14/2017] – I noticed a few more Florida counties being added yesterday to the IRS’s list.  As of just before Noon today, their list of affected counties is up to 37, including Citrus, where we are located.  As more hurricane damage is discovered and reported up the chain of command (FEMA, et al), this list will continue to grow.

[Update 9/15/2017] – The list of affected Florida counties is now up to 46.  Just 21 more to include the entire state.

[Update 9/16/2017] – The IRS list of affected Florida counties has now been changed to “This represents all 67 counties of Florida.”

[Update 9/20/2017] – IRS has just declared that Georgia taxpayers and preparers are also eligible for the special 1/31/18 extended filing deadline due to Hurricane Irma.

Posted in disaster, extensions, IRS | Comments Off on IRS Extends Deadlines for Irma Victims

Some Hurricane Harvey Tax Breaks

Posted by taxguru on August 29, 2017

There are a few silver linings to the still ongoing disaster in the Houston area as related to income taxes.

Filing Delay
As is always the case with huge unexpected disruptive events, IRS has officially extended tax filing and payment deadlines for people and businesses who are in the affected areas.  In this recent press release, IRS has extended the tax return filing and tax payment deadlines until January 31, 2018 for those who had tax returns due or extensions expiring in September and October 2017.  This includes millions of people who filed extensions for their 2016 1040s. 

IRS Gives Tax Relief to Victims of Hurricane Harvey; Parts of Texas Now Eligible; Extension Filers Have Until Jan. 31 to File

Deducting Unreimbursed Casualty Losses
Not mentioned in this IRS announcement is the fact that victims of Hurricane Harvey also have a choice about when to deduct their losses from this disaster.  Presidentially Declared Disaster Areas (PDDA) have a special tax break that “lesser” disasters don’t.  

Trump declares Hurricane Harvey federal disaster in Texas

Normal tax policy is to declare income received and expenses paid on the tax returns for that particular year.  If there were a fire or a small neighborhood flood in August 2017, those who were affected would have to wait to deduct their unreimbursed loses on their 2017 tax returns, which they would be filing with IRS in 2018.

In order to allow PDDA affected taxpayers to recoup some of their losses sooner, via tax reductions, they have the option to claim the casualty loss deduction on the normal year’s tax return (2017 for Harvey) or on the previous year’s return (2016 for Harvey).  You can see more details on this on the IRS website.

Tax Relief: Presidentially Declared Disaster Areas

Deciding on which tax return to claim the PDDA loss is, like many tax planning choices, based on when it will save you the most money.  As of today (8/29/17), we are only aware of one of our clients who has been personally hit by Hurricane Harvey, with an early estimated loss of around a million dollars.  We will most definitely be discussing the feasibility of deducting this loss on his 2016 1040, which also happened to be a year in which he had to report several millions of capital gains. 

Having spent several years in California, I do have quite a bit of experience in working with this issue with such disasters as earthquakes, as well as how to properly document and claim the losses on tax returns to avoid any IRS questions.  This includes attaching photographs of the home, before the disaster and after, as well as copies of contractor invoices for reconstruction costs.  The larger the deduction, the more documentation you need to attach to your tax return.  You don’t want to have to suffer through a disaster that’s often much worse than a hurricane, an IRS Audit.  

You can download a handy PDF reference on deducting casualty and theft losses here.  Courtesy of my favorite tax reference source, TheTaxBook.

Posted in casualty, disaster | Comments Off on Some Hurricane Harvey Tax Breaks